If you default on your home loan payments in Mississippi, the servicer (on behalf of the loan owner, called the “lender” in this article) will eventually begin the foreclosure process. The method will most likely be nonjudicial. Although rare, judicial foreclosures are also allowed. Mississippi law specifies how foreclosure procedures work, and both federal and state laws give you rights and protections throughout the foreclosure.
If you get a loan to buy a home in Mississippi, you'll likely sign two documents: a promissory note and a deed of trust. The promissory note is the document that contains your promise to repay the loan along with the repayment terms. The deed of trust is the document that gives the lender a security interest in the property and will probably include a power of sale clause. If you fail to make the payments, the power of sale clause gives the lender the right to sell the home nonjudicially so it can recoup the money it loaned you.
If you miss a payment, the servicer can usually charge a late fee after the grace period expires. Most mortgage loans give a grace period of ten to fifteen days, for example, before you’ll incur late charges. To find out the grace period in your situation and the amount of the late fee, review the promissory note or your monthly billing statement.
If you miss a few mortgage payments, the servicer will probably send letters and call you to try to collect. In most cases, federal mortgage servicing laws require the servicer to contact you (or attempt to contact you) by phone to discuss foreclosure alternatives—called “loss mitigation” options—no later than 36 days after a missed payment and again within 36 days after each following missed payment. No more than 45 days after a missed payment, the servicer must let you know in writing about loss mitigation options that could be available, and assign personnel to help you. Some exceptions to a few of these requirements exist, like if you file for bankruptcy or tell the servicer not to contact you under the Fair Debt Collection Practices Act. (12 C.F.R. § 1024.39).
Many deeds of trust in Mississippi have a provision that requires the lender to send a breach letter if you fall behind in payments. This notice tells you that the loan is in default. If you don’t cure the default, the lender can accelerate the loan (call it due) and go ahead with the foreclosure.
Federal law generally requires the servicer to wait until the loan is over 120 days delinquent before officially starting a foreclosure. But in a few situations, like if you violate a due-on-sale clause or if the servicer is joining the foreclosure action of a superior or subordinate lienholder, the foreclosure can begin sooner. (12 C.F.R. § 1024.41).
Again, the majority of foreclosures in Mississippi are nonjudicial. Because the out-of-court process is more common, those procedures are described below.
In Mississippi, the lender has to publish notice of the foreclosure sale in a newspaper for three consecutive weeks before the sale. The notice must also be posted on the courthouse door. (Miss. Code Ann. § 89-1-55).
Mississippi law doesn’t require the lender to notify you directly about the foreclosure. But as noted earlier, most deeds of trust require the bank to send a breach letter before accelerating the loan. The bank can’t foreclose until after acceleration.
The sale is an auction, open to all bidders. The lender usually bids on the property using a "credit bid" rather than bidding cash. With a credit bid, the lender gets a credit up to the amount of the borrower’s debt. Sometimes the lender bids the full amount of the debt; sometimes, it bids less. The highest bidder at the sale becomes the new owner of the property. Usually, the lender is the high bidder at the foreclosure sale and becomes the new owner of the property.
“Reinstating” is when a borrower pays the overdue amount, plus fees and costs, to bring the loan current and stop a foreclosure. Under Mississippi law, you may reinstate at any time before the sale by getting caught up on the past-due payments of principal and interest, plus certain fees and costs. (Miss. Code Ann. § 89-1-59).
Sometimes, a foreclosure sale doesn’t bring in enough money to pay off the full amount owed on the loan. The difference between the sale price and the total debt is called a “deficiency balance.” Many states allow the lender to get a personal judgment, called a “deficiency judgment,” for this amount against the borrower.
The lender can get a deficiency judgment after a nonjudicial foreclosure by filing a lawsuit against you within one year after the sale date. (Miss. Code Ann. § 15-1-23). To get a deficiency judgment, the winning bid at the foreclosure sale must be reasonable based on the property’s fair market value.
Some states have a law that gives a foreclosed homeowner time after the foreclosure sale to redeem the property. In Mississippi, however, you don't get a post-sale redemption period after a foreclosure.
Once a nonjudicial foreclosure in Mississippi is complete, the person or entity that bought the property at the foreclosure sale may begin the eviction process, usually after making a demand for possession.
Foreclosure laws are complicated. Servicers and lenders sometimes make errors or forget steps. If you think your servicer or lender failed to complete a required step, made a mistake, or violated state or federal foreclosure laws, you might have a defense that could force a restart to the foreclosure, or you might have leverage in working out an alternative.
Consider talking to a local foreclosure attorney or legal aid office immediately to learn about your rights. A lawyer can also tell you about different ways to avoid foreclosure. Likewise, a HUD-approved housing counselor can provide helpful information (at no cost) about various alternatives to foreclosure.